Comprehensive Energy Data Intelligence
Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...
Chesapeake Dominates with $7.4B Southwestern Buy
01/29/2024.png)
- Focus: Increased LNG export demand
- Post-merger production: 7.9 Bcfepd capacity
- Chesapeake shareholders will own about 60% of the combined company
- Up to 20% of future production will be tied to international pricing
Chesapeake Energy has agreed to purchase its competitor, Southwestern Energy, in a $7.4 billion all-stock deal. The acquisition anticipates a boost in natural gas demand with new U.S. LNG export terminals coming online in 2025.
With a combined output of about 7.9 billion cubic feet per day, the new entity will surpass EQT Corp, becoming the largest independent U.S. natural gas exploration and production company in terms of market value and production.
When Chesapeake and Southwestern combine, they'll be worth around $24 billion. This makes them strong competitors to companies like Chevron and EQT.
This merger is part of a trend where U.S. oil and gas companies are joining forces. For example, Chevron recently planned to buy Hess for $53 billion. And before that, Exxon Mobil agreed to purchase Pioneer Natural Resources, a big player in Texas's Permian Basin, for $60 billion.
Chesapeake's CEO, Domenic Dell’Osso, who will lead the merged entity, remarked, "By combining our companies, we are LNG-ready."
New Start, New Goals
The deal is slated for completion in the next quarter. Nick Dell’Osso as President and Chief Executive Officer of the combined company highlighted the rising demand from LNG exporters as a key driver for the merger. He noted that up to 20% of the new company's production is expected to be linked to international market prices.
“This powerful combination redefines the natural gas producer, forming the first U.S. based independent that can truly compete on an international scale.”
- Nick Dell’Osso
The merger of Chesapeake and Southwestern will significantly boost their capacity, as noted by Matt Portillo, an analyst at Tudor Pickering & Holt. He sees this as a chance to unlock new LNG opportunities. In recent times, U.S. gas production has exceeded domestic needs, leading to high inventories and lower profits. Currently, U.S. gas is trading at about $3 per million British thermal units, a notable drop from last year's prices.
“Bringing Chesapeake and Southwestern together will reduce overall costs.”
- Peter McNally, an energy analyst at Third Bridge
This acquisition marks Chesapeake's largest step in reclaiming its position as a top U.S. gas producer after its 2021 bankruptcy restructuring. Last year, they expanded in the Northeast U.S. shale regions with a $2.5 billion acquisition of Chief E&D.
Kimmeridge Energy Management, an investor in both firms, backs the merger. They see it as a strategic shift from oil to gas production. Southwestern's main output comes from the Appalachian shale and the Haynesville shale, which is near U.S. LNG export facilities.
The Chesapeake and Southwestern merger, set to wrap up in the next few months, will launch under a new name. This ends the Chesapeake brand, which started about 35 years ago. After the merger, Chesapeake's current owners will have about 60% of the new company, with Southwestern's owners getting the rest.
About Chesapeake Energy
Chesapeake Energy, known for its role in pioneering shale gas extraction, has been key in making the U.S. a net natural gas exporter. However, it's been a rough road lately. In 2020, the company filed for bankruptcy with over $20 billion in debt, largely due to the actions of co-founder Aubrey McClendon, who aggressively expanded operations more than the market demanded.
McClendon, who started Chesapeake in 1989, pushed hard in shale gas extraction in Texas, Louisiana, and Oklahoma, making Chesapeake a top gas producer in the early 2000s. But by producing too much gas, the company struggled, especially when the industry shrank in the early 2010s. McClendon left in 2013 amid corruption allegations and sadly passed away in 2016.
By 2021, Chesapeake bounced back, cutting down its debt and growing again. It bought Vine Energy and increased operations in Louisiana and East Texas's Haynesville Shale region.
Meanwhile, Southwestern Energy, mainly active in Appalachia, had about 90% of its production and 75% of its reserves there in 2021. The rest of its reserves are in the Haynesville Shale area. This geographical spread gives the newly merged company great chances to grow.
If you are looking for more information about energy companies, their assets, and energy deals, please, contact our sales office mapping@hartenergy.com, Tel. 619-349-4970 or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
Occidental, CrownRock Merger Under Regulatory Review: 2024 Update
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/R 228 (Blog)- Occidental, CrownRock Merger Under Regulatory Review_ 2024 Update.png)
CrownRock's 94,000+ net acres acquisition complements Occidental's Midland Basin operations, valued at $12.0 billion. This expansion enhances Occidental's Midland Basin-scale and upgrades its Permian Basin portfolio with ready-to-develop, low-cost assets. The deal is set to add around 170 thousand barrels of oil equivalent per day in 2024, with high-margin, sustainable production.
Bakken's Tipping Point: Grayson Mill's Potential Fall After Chevron-Hess
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/R-230(1)Blog_Grayson Mill acquired Ovintiv's Bakken assets for $825M in 2024.png)
The Permian Basin, a big oil area, is not seeing as many deals as before because lots of companies have already joined together. Now, experts think these companies might start looking for new places to invest in the U.S. One area getting attention is the Bakken play. Chevron Corp. has just made a big step there by buying Hess Corp. for $60 billion. Another company, Grayson Mill Energy, which got some help from a Houston investment firm EnCap Investments LP, might also be up for sale soon, worth about $5 billion.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/Top-Permian-Oil-and-Gas-Producers-Five-Year-Production.jpg)
OXY has been the leader in Permian Basin production for the past five years. Currently, the Houston-based oil and gas company is deepening its presence in the basin with a $12 billion acquisition of CrownRock, adding over 94,000 acres in the Midland Basin and increasing its oil output by about 170,000 barrels per day. Occidental announced an increase in its proved reserves to 4.0 billion barrels of oil equivalent by the end of December 2023, up from 3.8 billion the previous year. Activities in the Permian largely fueled this rise. Occidental added approximately 303 million barrels through infill development projects as well as new discoveries and the further development of existing fields brought in another 153 million barrels.
TotalEnergies kicked off 2024 with a net income of $5.7 billion in the first quarter, marking a modest 3% increase from the same period last year and a 13% rise from the previous quarter. This growth occurred despite experiencing drops in both the volume and price of gas sales over the year and the quarter. Their adjusted net earnings, which exclude one-time or unusual items, were $5.1 billion. This represents a significant 22% decline compared to last year and a slight 2% drop from the last quarter. The company's earnings before tax, depreciation, and amortization reached $11.5 billion, while their cash flow from operations significantly decreased to $2.2 billion, falling by 58% from last year and a steep 87% from the previous quarter. TotalEnergies also recorded $644 million in impairments.
![$data['article']['post_image_alt']](https://images2.rextag.com/public/blog/R268_Blog_Rockies Overview by Rextag_ Green River, Powder River, Niobrara-Denver Julesburg, Piceance, Uinta, San Juan, Paradox Basin, Wyoming, Colorado, Utah, New Mexico.png)
New Mexico leads the Rockies region in gas production and ranks as the sixth-largest in terms of active gas wells in the U.S. Last year, the state's gas well count slightly increased by 0.2% to 30,699, with new additions in both the northwestern San Juan Basin and the southeastern Permian Basin. Meanwhile, just to the north in Colorado, gas producers grew by a modest 0.1% to 30,322, primarily due to increased drilling activity in the DJ and Piceance basins. Wyoming saw a decline in its active gas wells by 3.7%, down to 17,006, with production mainly in Sublette, Sweetwater, and Converse counties reflecting stable or slightly reduced drilling activity. Utah also experienced a slight decrease of 0.2% in its number of gas wells, totaling 6,463. In Q1 2024, oil and gas industry activity in Oklahoma, Colorado, and northern New Mexico experienced a decline. This marks the fifth consecutive quarter of contraction in drilling and business activities within these regions. According to a survey that included responses from 33 firms operating in the Rockies, this downtrend is expected to continue over the next six months.